Essay --

IntroductionTrust is a actually important impression in be. According to the American Institute of bear witness Public Accountants (AICPA) account statement is a service activity. Its function is to provide three-figure reading, primarily financial in nature, well-nigh economic entities that is int decisioned to be useful in making economic decisions, in making reasoned choices among alternative courses of action. These economic decisions are made by companies, stockholders, consumer, and many separate parties. These decisions have to do with money, therefore directly impact the lives of everyone who puts their trust in accountants to paint an accurate financial picture on which these parties make their decisions. However, sometimes it can be beneficial to one party to paint an faulty picture, or in other words, report false financial information. This is where accounting soils come into play. sometimes big companies use accounting reports to lie about their finances to harbour making money. One very notable and ill-famed instance where such(prenominal) an accounting scandal occurred was with Enron from the late 1990s until the end of 2001. Background informationEnron Corporation was born in 1985. The government had started deregulation of natural squander pipelines, and Houston Natural Gas and InterNorth, two existing companies merge to create Enron. The deregulation of the gas pipelines however, caused Enron to not have exclusive rights to pipelines and because of the merger, Enron had a lot of debt. To clench itself afloat the company needed a freshly business schema to get cash flowing and profits orgasm in. Kenneth Lay was the chief operating officer of Enron at that point, and he hired Jeffery Skilling, who dealt with asset and financial obligation management, as a consultant to co... ...of the largest accounting firms in America, in criminate of auditing Enron then became involved, and undone any of Enrons documents that could p rove that they were breaking the law. Consequences and demonstrationIn the end, Enron could not keep itself afloat once it turned to fraud. Shareholders wooly-minded $74 billion, thousands of employees and investors scattered their retirement accounts, and many employees lost their jobs. Lives were ruined. Lay died sooner serving time. Skilling got 24 years in prison. Fastow agreed to become an reservoir and therefore got less(prenominal) time in prison. The company filed for bankruptcy. Arthur Andersen was found shamed of falsifying Enrons account and destroying evidence, and the firm failed. People still verbalize about the Enron scandal today, and accounting practices are now held to a high standard in order to avoid a catastrophe want this again. Essay -- IntroductionTrust is a very important concept in accounting. According to the American Institute of Certified Public Accountants (AICPA) Accounting is a service activity. Its function is to provide quant itative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions, in making reasoned choices among alternative courses of action. These economic decisions are made by companies, stockholders, consumer, and many other parties. These decisions have to do with money, therefore directly impact the lives of everyone who puts their trust in accountants to paint an accurate financial picture on which these parties make their decisions. However, sometimes it can be beneficial to one party to paint an inaccurate picture, or in other words, report false financial information. This is where accounting scandals come into play. Sometimes big companies use accounting reports to lie about their finances to keep making money. One very notable and infamous instance where such an accounting scandal occurred was with Enron from the late 1990s until the end of 2001. Background informationEnron Corporation was born in 1985. The govern ment had started deregulation of natural gas pipelines, and Houston Natural Gas and InterNorth, two existing companies merged to create Enron. The deregulation of the gas pipelines however, caused Enron to not have exclusive rights to pipelines and because of the merger, Enron had a lot of debt. To keep itself afloat the company needed a new business strategy to get cash flowing and profits coming in. Kenneth Lay was the CEO of Enron at that point, and he hired Jeffery Skilling, who dealt with asset and liability management, as a consultant to co... ...of the largest accounting firms in America, in charge of auditing Enron then became involved, and destroyed any of Enrons documents that could prove that they were breaking the law. Consequences and ConclusionIn the end, Enron could not keep itself afloat once it turned to fraud. Shareholders lost $74 billion, thousands of employees and investors lost their retirement accounts, and many employees lost their jobs. Lives were ruined. L ay died before serving time. Skilling got 24 years in prison. Fastow agreed to become an informant and therefore got less time in prison. The company filed for bankruptcy. Arthur Andersen was found guilty of falsifying Enrons account and destroying evidence, and the firm failed. People still talk about the Enron scandal today, and accounting practices are now held to a higher standard in order to avoid a catastrophe like this again.